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Uncharted Waters for Regulatory Compliance

Ben Mason, Joint CEO (18th August 2015)


Ben Mason

The demand for specialist compliance staff in the financial services sector has grown dramatically over the last few years, but it remains to be seen how that need will be met without sacrificing standards.

CEOs rightly expect their compliance function to have the ability to identify the impact of current and future regulatory changes on their company’s strategy and business plan, to implement monitoring and reporting processes that identify and mitigate regulatory and business risks and, perhaps most importantly, the leadership skills to take colleagues on a journey towards a new culture of compliance.

There are always exceptions of course. Some management teams simply want “yes men” – easily found by over-promoting staff that lack real competence for compliance roles and who’re inevitably unable to provide a balance between constructive challenge and commercial support.

Back in January 2013, Reuters reported on a CBI/PwC survey that found, “British financial firms are worried about not having enough staff to deal with compliance and regulatory issues...” and that, “Specialists in compliance and financial regulation are in particularly high demand, after the debt crisis exposed huge gaps in regulation and standards and led to a swathe of new controls...”

Little seems to have changed since then. If anything, the issue of supply being unable to match demand has become more critical. In February this year, the Robert Walters City Job Index reported, “Particularly acute talent shortages in compliance,” that were 47% higher than average. The problem is compounded by fundamental misapprehensions about the nature of compliance management and arguably even the need (for the majority of regulated firms) to employ compliance staff at all.

Ann Swain from the Association of Professional Staffing Companies demonstrated the perception gap when, commenting to City A.M. in July, she said, “Contract vacancies within finance and accounting remain strong as organisations bring on board compliance specialists on a project basis to help manage legislation.”

While it’s certainly the case that some aspects of compliance can be approached as distinct projects – authorisation applications being a prime example – on the whole, compliance needs to be an on-going and deeply-embedded activity.

Unfortunately, there’s a distinct lack of effort and coordination to address the compliance talent shortage. It’s neither the brief of government, nor the statutory objective of regulators, to intervene in the issue and no politician is championing the cause. This reflects the relative impotence and lack of resources of compliance industry associations who might otherwise be lobbying government.

Variations in demand and supply are easy to dismiss as just being part of a market sorting itself out over time. However, I believe a more structured solution and career path for compliance professionals would be in everyone’s interest. Consider how the accounting and legal professions develop their future population through a tried and tested model that combines several years of practical experience with relevant formal qualifications and strong backup and support. There’s no sign of an equivalent compliance career development programme on the horizon. The current best alternatives are either very limited part-time diploma-style courses or academic Masters Degrees. Worthy though these are they’re not the same as long-term vocational development.

The scope of regulatory compliance is so broad that it needs (and welcomes) professionals from a wide range of other backgrounds. I hold an MBA and have found my commercial and strategic experience of huge value within a compliance career that didn't start until my 30s. Many compliance staff have legal or accounting qualifications, both of which have an important compliance role, as does the experience of practitioners, operational staff, risk managers and so on. It’s as much a strength as a weakness, since the range of tasks compliance staff are asked to carry out makes formulating a standard development programme very difficult, but I'm convinced it’s a challenge the industry could overcome.

Highlighting the opportunity in the July 2015 edition of the City Job Index report, Chris Hickey, CEO of recruitment firm Robert Walters, commented, “Financial services professionals from other backgrounds frequently have transferable skills that can be applied to roles in risk or to enable them to take on project roles. Employers who are prepared to invest in upskilling such professionals stand to secure talented workers for much needed roles.”

There are no easy answers. The entire regulated sector needs to recognise the challenge, encouraging new entrants and training them diligently in the broad range of technical and commercial skills the best compliance staff need.

One thing that seems certain is that firms unable to resource their compliance functions properly, whether with internal staff or external consultancy, are likely to run aground.




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